ITG Corporate Access California NDRS - …files.shareholder.com/downloads/ABEA-24DHFE/1598174540x0x820584… · ITG Corporate Access California NDRS. Safe Harbor Statement ... ABB/Power

April 13th & 14th, 2015

ITG Corporate Access California NDRS

Safe Harbor Statement

Confidential Bel Fuse, Inc. 1

Except for historical information contained in this presentation, the matters discussed in this presentation (including the statements regarding the impact of the Company's expertise and products on customer purchasing decisions, anticipated growth in revenues, the accretive nature and projected cost savings associated with the Power Solutions and CS acquisitions and potential future growth for the Company's shareholders) are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from Bel's projections. Among the factors that could cause actual results to differ materially from such statements are: the market concerns facing our customers; the continuing viability of sectors that rely on our products; the effects of business and economic conditions; difficulties associated with integrating recently acquired companies; capacity and supply constraints or difficulties; product development, commercialization or technological difficulties; the regulatory and trade environment; risks associated with foreign currencies; uncertainties associated with legal proceedings; the market's acceptance of the Company's new products and competitive responses to those new products; and the risk factors detailed from time to time in the Company's SEC reports. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct. We undertake no obligation to update or revise any forward looking statements.

POWER | PROTECT | CONNECT

Bel Attendees

Confidential Bel Fuse, Inc. 2POWER | PROTECT | CONNECT

Presenter Background

Colin DunnVP Finance &

Secretary

• Vice President of Finance since 1992 and Secretary since May 2003• Finance Manager since 1991, after previously serving as a Director of Bel Fuse Ltd. and Bel Fuse

Macau LDA• Vice President of Finance and Operations - Kentek Information Systems from 1985-1991• MBA degree from Yale University

Dennis AckermanVP Operations

• Joined Bel in 1986 and has held various positions in Sales, Materials, and Operations• Vice President of Operations since 2001• President of Bel Power Solutions since 2014• MBA degree from Fairleigh Dickinson University

Investment Highlights


• Demonstrated history of stable revenue growth and EBITDA

• Strong track record of cash flow generation

• Consistent performance driven by:• Diverse group of customers• Stable end markets• Successful integration of acquisitions• Stable management team


Transformational Growth Through Acquisition


Magnetic Solutions

Power Solutions & Protection

Connectivity Solutions

050100150200250

2010 2014

$104m ‐ $198m

0

100

200

300

2010 2014

$74m‐ $256m

0

50

100

150

200

2010 2014

$123m ‐ $173m


2014 sales reflect estimated full year pro forma sales from acquisitions.

Pursue Highly Strategic Acquisitions


• Proven, disciplined approach to acquiring

companies-Accretive to earnings (EPS)

-Leverage our fixed costs

-Expand our global footprint

-Focus on products and markets that we know

Acquisition Rationale

and understand

• 8 successful acquisitions in the last five years. Four were divestitures from billion dollar conglomerates.

Growth through Acquisition


Acquired Company Year Products Revenue Purchase

Emerson Network Power Connectivity Solutions* 2014 Connectivity $78M $98M

ABB/Power‐One Power Solutions* 2014 Power $194M $117M

TE’s Coil Wound Magnetics Business* 2013 Magnetics $75M $22.4M

Array Connector 2013 Connectivity $10M $10M

GigaCom Interconnect 2012 Connectivity $2M $2.7M

Fibreco Limited 2012 Connectivity $7M $13.7M

Powerbox Italia S.R.I. 2012 Power $4M $3M

Cinch Connectors* 2010 Connectivity $52M $37.5M

Galaxy Power 2005 Power $18M $18M

Insilco Passive Components Group* 2003 Magnetics $70M $35M

APC UK 2003 Power $5M $5.5M

E‐Power/Current Concepts 2001 Power $3M $6.2M

Lucent Transformers + Inductor Group* 1998 Magnetics $35M $30M


Power Solutions at a GlanceProduct Line Overview

Select Customers

* Dubnica and GongMing labeled as Plants, but also have design and customer service center

Headquarters

Global Footprint

Design / Sales CentersManufacturing FacilitiesContract Manufacturers

2014 Revenue $194MProduct lines Markets served Select product

examples

Front-End (“FE”)

Board-Mount-Power (“BMP”)

Industrial and Transportation (“IND”)

Network Power Systems (“NPS”)

Servers, storage, networking and telecommunications markets

Networking, telecommunications, military and the broad industrial markets

Broad industrial, medical, military, rail and transportation markets

Telecommunication infrastructure applications and remote power generation


Products End Market Geography

Connectivity Solutions at a GlanceProduct Line Overview

Select CustomersGlobal Footprint

2014 Revenue $78MProduct lines Markets served Select product

examples

RF Coax Connectors & Cables

Microwave Components

Harsh Environment Optical with Expanded Beam

Aerospace , Broadcast, Military, Telecommunications

Military, Space, Laboratory Testing

Broadcast, Military, Oil & Gas

Mil/Aero29%

Telecom7%Broadband

7%Industrial/OEM5%

Contract Mfg3%

Test/Med2%

Other5%

Distribution42%

HeadquartersSales CentersManufacturing Facilities


Products End Market Geography

Leverage our Fixed Cost


• Restructure management $5.8M• Utilized existing Bel management and existing middle level management to

restructure senior leadership.

• Eliminate redundancies $2.7M• Reduced headcounts in areas where Bel, with a combination of the two

acquisitions, overlapped in certain functions such as web site development,

marketing, sales, product management, and logistics.

• Combine facilities (estimated to be $1.5M by 2016)• Closed Singapore and Russia office of Power-One• Closing Gothenburg Sweden office of Gigacom• Combining Fibreco UK into Connectivity Solutions UK facility• Combining Bel Pleasanton, CA location with Bel Power San Jose, CA facility• Combining Bel Power Hong Kong into Bel Fuse Hong Kong owned location• Plan to combine Cinch Lombard, IL facility with Bannockburn, IL facility


Corporate Constraints Lifted


Meetings and Programs• 15% -20% of direct staff time was spent on reporting to corporate, while top management spend 40%

- 60% of their time reporting to corporate

• Management processes such as weekly staff meetings, PACE, S&OP, GDP programs consumed a lot of resources and added little value

Customer Terms• Contract limitations with large OEM customers, due to risk averse nature of the company

• No flexibility for payment terms beyond 30 days.

• Terms & Conditions – Mandatory limitations of liabilities

Unrealistic Company Goals• Gross profit and operating targets needed to be maintained

• Quarterly revenue targets resulted in uneven production schedules and increased overtime and logistics costs

• Arbitrary headcount controls (revenue drops by 5%, headcount needs to drop by 5%)


Going Forward

Category Bel Power‐One Connectivity Solutions

Combined

Revenue $356M $194M $78M $628M*

Employees 5,500 2,000 525 8,025

R&D Centers 16 3 4 23

Manufacturing Sites 13 2 5 20

Facilities 1.86M sq ft 377K sq ft 215K sq ft 2.45M sq ft


* If Bel owned for 12 months

Going Forward

Americas35% Annual Revenue • 10 Manufacturing Sites• 10 Design Centers

Asia44% Annual Revenue• 5 Manufacturing Sites• 5 Design Centers

Europe20% Annual Revenue• 4 Manufacturing Sites• 7 Design Centers


Market Segmentation

Networking40%

Mil‐Aero25%

Telecom15%

Industrial20%

Revenue By Region

North America ‐ 35.4% Europe ‐ 20.2% Asia ‐ 44.4%


Diverse End-Markets and Blue Chip Customer Base

Aerospace Cloud Energy IC CO’s Industrial Lighting Military

Networking Net Security Premise Servers Storage Telecom Wireless


Broad, Industry Leading Product Portfolio

Integrated Connector Modules

Transformers

Magnetics

Front Ends & Board‐Mount Power

Industrial

Circuit Protection

Magnetic Solutions $174 million

Power Solutions & Protection$256 million

Connectivity Solutions$198 million

RF Connectors /Microwave Components

Passive Connectors

Connectors & Cable Assemblies


Power Solutions & Protection• Technology Leaders in efficiency and power density for Front‐End and Board‐Mount Power products for networking, cloud and open compute applications

• World‐Class offering and well‐recognized brand Melcher™ in Industrial and transportation markets

• Complete Portfolio of Electronic Circuit Protection Products

• Reengage with key customers

• New standard products AC/DC, DC/DC, and Circuit Protection

• Expanded offering for railway applications

• Partnership with Echelon

• New products for hybrid electric vehicles

Growth Driv

ers

LTM Revenue: $256M | Percent of Total Revenue: 41%

Overview

Servers, Storage & NetworkingIndustrial and Transportation

Lighting


:Bran

ds

Connectivity Solutions• World‐Class RF and Microwave Connector supplier

• Market leader for Expanded Beam and Fiber Connectivity

• Largest supplier of Boeing approved Circular Connectors (BACC) for the aerospace industry

• Market leader in deployment of 10GBT Passive RJ Connectors

• Emerson acquisition creates critical mass in expanded beam and Active Optical devices (Transceivers and Media Convertors)

• Expanded Copper based Connector and Cable offering and Cross‐Licensing with Radiall for innovative solutions in commercial aerospace

• Greater strength in distribution channels and better penetration across existing accounts

Growth Driv

ers

LTM Revenue: $198 mm | Percent of Total Revenue: 32%

Overview

Computer, Network & CommunicationIndustrial & MedicalMilitary & Aerospace


Bran

ds

Magnetic Solutions• Largest offering of Integrated Connector Module products (MagJack®)

• Broad offering of Magnetics for industrial, consumer and commercial applications

• Largest selection of IC reference designs

• Market leader in deployment of 10GBT Integrated Ethernet Connectors

• Higher bandwidth and greater complexity requirements

• Continued expansion of SMD inductor and switching magnetics

• Internet Protocol (IP) traffic growing at nearly 20% CAGR

• Continued growth from end users picking up IC reference designs

• Volume production of press‐fit MagJack® connectors

Growth Driv

ers

LTM Revenue: $174 mm | Percent of Total Revenue: 27%

Overview

Computer, Network & CommunicationIndustrial & Medical

Consumer


Bran

ds

Case Study #1


Case Study #1


Dura-Con (4)

* Bel content $50K per aircraft depending on configuration

FQIS (7)Omega (5,500)


BCA Production Rates 1Q15 CPI StudyApproved ratesStudy Activity

BOEING PROPRIETARY / DISTRIBUTION LIMITED TO THOSE WITH A NEED TO KNOW

Current Rate

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Protection Rate

737

42

4247.2 (7/17)52.5 (6/18)

7471.5

2

7671.5 2

777

8.38.3

78710

1012 (5/16)14 (2/19)

42

1.5

10

2

47.19

1.3

12 14

Supports MAX Transition Plan Rev E R1Scenario 1 & 2:Production Rate Increases 57.69/mo

Production rate increase Jun 2019

Production rate increase Jun 2019 Production rate increase Jun 202052.5

57.69/mo 62.98/mo

8.3

Protection Rate

Commercial Aviation Market

World Air Travel has grown 5% per year since 1980RPKs = Revenue Passenger Kilometers


Commercial Aviation MarketAirlines will need more than 35,000 new airplanes valued at $4.8 trillion


Commercial Aviation Market737 MAX is selling at a record paceNet orders in the first 25 months


737 MAX: 1,763 ordersA320neo: 1,734 orders

Case Study #2

POWER | PROTECT | CONNECT Confidential Bel Fuse, Inc. 25

Case Study #2

10Gig ICMs

Internal Board level components include- Fuses- DC/DC isolated board mount converters- DC/DC point-of-load converters

Multiport 1Gig ICMs

AC/DC Front-End Power

* Bel content $496/unit, depending on configuration

Cisco Nexus 7000 Switch


Financial Overview


Balance Sheet Highlights


12/31/13 12/31/14

Cash & Cash Equivalents $62.1 mm $77.1 mm

Working Capital $137.2 mm $188.9 mm

Total Assets $308.1 mm $636.0 mm

Total Debt $12.0 mm $232.6 mm

Stockholders’ Equity $228.7 mm $224.8 mm

Book Value per Share $19.86 $19.87

Cash & Cash Equivalents & Net Debt


‐200

‐150

‐100

‐50

0

50

100

150

$107.7 $96.1

$124.5

$85.5$94.0

$71.0$50.1

‐$155.5

$ in M

illions

Debt Balance


* If Bel owned for 12 months

Loan 12/31/14Balance

Payment Schedule

Principal Interest Total DebtPayments

Term Loans

Revolver

$209,625

23,000

Balance2015 13,438 6,555 19,993

Total Debt

Cash

$232,625

77,138

201620172018

16,12518,81224,188

6,0355,5274,906

22,16024,33929,094

Net Debt $155,4872019 160,062 2,012 162,074

LiquidityCashRevolver Availability

$77,138

27,000

Total DebtPayments $232,625 $25,035 $257,660

Total Liquidity $104,138

Pro Forma Historical Capex


(1) In Thousands

4,744 6,940

5,636

2,839

6,247

4,752 1,741

1,060

1,543

‐

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2012 2013 2014

Bel Power Solutions Connectivity Solutions

$9,324

$14,247

$11,931

Adjusted EBITDA


$55.7

$64.3

$66.5

$50

$52

$54

$56

$58

$60

$62

$64

$66

$68

FY2012 FY2013 FY2014• FY2012 and FY2013 Proforma Adjusted EBITDA per the June 2014 Lender

Presentation• FY2014 EBITDA per the Credit Agreement

(1) In Millions

Share Ownership


Class A

NASDAQ: BELFA

Class B

NASDAQ: BELFB

• 2,175,000 shares outstanding

• 20 institutions own ~ 1,047,000 shares

• Quarterly dividends $0.06 per share

• 35% held by insiders

• 9,680,000 shares outstanding

• 103 institutions own ~ 6,013,000 shares

• Quarterly dividends $0.07 per share

• 15% held by insiders

Documents

ITG Corporate Access California NDRS - …files.shareholder.com/downloads/ABEA-24DHFE/1598174540x0x820584… · ITG Corporate Access California NDRS. Safe Harbor Statement ... ABB/Power